The Strategist

Trump’s policy collapsed foreign direct investment in the US

07/06/2017 - 14:26

The inflow of direct investment in the US has decreased noticeably. German businessmen are particularly cautious, WirtschaftsWoche writes with reference to the preliminary calculations of the US statistical office.

The amount of direct investment of foreign enterprises into the American economy has sharply decreased. This is particularly true for Germany, says WirtschaftsWoche edition on Sunday, July 2, citing preliminary data from the US statistical office. According to the Bureau of Economic Analysis, the amount of foreign direct investment in the US amounted to 83.6 billion dollars in the first quarter of 2017, which is almost 40 percent lower than the same figure for the first quarter of 2016. The publication notes that German enterprises were noticeably cautious in the fourth quarter of 2016 as well, having invested about $ 1.41 billion in creation and expansion of production facilities in the US, which is 4 billion less than in the third quarter of the same year. For the period from January to the end of March 2017, this amount fell to 992 million dollars.

If the preliminary calculations of the statistical office are confirmed, it will mean that the volume of direct investment from Germany to the US declined to the level of the first quarter of 2013. The new US administration is sowing uncertainty among German entrepreneurs, explained Stormy-Annika Mildner, head of the foreign economic policy department of the Federal Association of German Industry (BDI) in an interview with WirtschaftsWoche.

The uncertainty has arisen in connection with a number of Donald Trump’s pre-election statements during the election campaign. For instance, he promised to correct the "imbalance in world trade", for which he, having found himself in the White House, proclaimed a course towards the abolition of free trade and the introduction of protectionism. In particular, the Trump administration is accusing China and a number of European states, primarily Germany, of using dishonest methods to achieve these countries a positive balance in trade with the United States.

German firms have created jobs in the US 672,000 and are the third most important foreign employer. 70 percent of exports from Germany fall on supply of products to plants in the United States in a single production process. More than half of exports from Germany are semi-finished products and equipment, for example, German engineering products, which ultimately strengthen the position of American industry, says the German Ministry of Economics and Energy.